by ALIFAH ZAINUDDIN and Pic by ISMAIL CHE RUS
“GOOD governance” seems to be the current buzzword in the corporate scene. This month alone saw some of the country’s most prominent figures, from the prime minister to institutional investors, speak rather casually about the contentious subject.
Second Finance Minister Datuk Seri Johari Abdul Ghani recently admitted that the fiascos of 1Malaysia Development Bhd were the result of a wrong business model, weak management and poor governance.
“The prime minister acknowledged that and we are in the process of taking the elephant out of the room,” Johari said during a panel discussion at Invest Malaysia 2017 on Tuesday.
In short, everyone wanted to make it clear that they were on the right side of the track, and that they were visibly against the vices of corruption.
Boardroom investigations were expedited, a governance unit had been set up and regulators upped the ante by implementing new corporate codes on governance.
Malaysian Institute of Management (MIM) CEO Sivanganam Rajaretnan said the country’s ability to have open discussions on contentious governance issues showed that Malaysia is now more prepared to accept and learn from criticisms.
“Corporate Malaysia is definitely maturing. We have seen many failed practices and when things go bad it always leads back to governance.
“There is a moral obligation for people throughout an organisation to flag issues,” Sivanganam told The Malaysian Reserve in an exclusive interview.
He said the growing interest in good corporate governance can be accredited to a trust deficit in institutions, due to greater information accessibility and a new generation mindset.
According to the 2017 Edelman Trust Barometer, trust in four selected institutions, namely the government, media, businesses and non-governmental organisations, have fallen significantly compared to the previous year.
Trust in media fell significantly to 43% and is at all-time lows in 17 countries, while trust levels in government — which stood at 41% — dropped in 14 markets and is the least trusted institution in half of the 28 countries surveyed, the report noted.
It further highlighted that current populist movements are fuelled by a lack of trust in the system and economic and societal fears, including corruption (40%), immigration (28%), globalisation (27%), eroding social values (25%) and the pace of innovation (22%).
Sivanganam added that the new generation, or millennials, who are penetrating the workforce also have high standards for corporate governance and expect systems to be transparent.
“They want to be associated with good brands, and good brands are great advocators of good governance. They want to go into an environment where the systems are fluid,” he said.
Sivanganam said the move made by various quarters to promote the centrality of corporate governance has been commendable, and suggested that a scorecard or a rating profile on good governance could be introduced by relevant bodies.
“With the scorecard or the rating profile, we can identify the model for governance and level of compliance structures that should be put in place.
“Once we have that, we will be able to gauge on the progress made,” he said.
He also proposed that the Royal Malaysian Customs Department and the Inland Revenue Board step up their reporting approach by including an additional audit on corporate governance, in addition to their current check on tax compliance.